Microsoft Shares rose as much as 5% in prolonged trading on Thursday after the software maker reported fiscal third-quarter results that beat Wall Street expectations.
Here’s how the corporate performed in comparison with LSEG’s consensus:
- Earnings per share: $2.94 versus expected $2.82
- Revenue: $61.86 versus expected $60.80 billion
Microsoft’s total revenue rose 17% year-over-year within the quarter ended March 31, in response to a study opinion. Net income was $21.94 billion, or $2.94 per share, up from $18.30 billion, or $2.45 per share, in the identical quarter last yr.
In terms of guidance, Microsoft CFO Amy Hood predicted fiscal fourth-quarter revenue of $64 billion, below the LSEG consensus of $64.5 billion. Hood’s forecast implies an operating margin of 42.3%, above the StreetAccount consensus of 41.5%.
“Currently, near-term AI demand is slightly higher than our available capacity,” Hood said. Microsoft has increased its capital expenditures to back it up Nvidia Graphics processing units for training and running artificial intelligence models.
In the fiscal third quarter, Microsoft’s Intelligent Cloud segment, including Azure public cloud, Windows Server, Nuance and GitHub, generated revenue of $26.71 billion. That’s up about 21% and greater than the $26.26 billion consensus of analysts surveyed by StreetAccount.
Revenue from Azure and other cloud services rose 31%, in comparison with 30% within the previous quarter. Analysts polled by CNBC had expected 28.8%, while the StreetAccount consensus was 28.6%.
Within Azure growth, 7 percentage points were driven by AI, up from 6 points within the previous quarter. Microsoft provides cloud services for startup OpenAI’s ChatGPT chatbot, and firms are increasingly using Azure AI services to develop their very own functions for summarizing information and writing documents.
The capability shortage hurt the AI portion of Azure’s growth, Hood said.
Microsoft’s code generation tool GitHub Copilot now has 1.8 million paid subscribers, CEO Satya Nadella said in a conference call with analysts.
The Productivity and Business Processes division, which incorporates office productivity software, LinkedIn and Dynamics customer relationship management software, generated revenue of $19.57 billion, up about 12%. The StreetAccount consensus was $19.54 billion. This is the primary full quarter of sales for the Copilot add-on for Microsoft 365 industrial subscriptions. Copilot uses AI models from OpenAI, through which Microsoft has invested billions.
Amgen is amongst the purchasers which have signed up for 10,000 Copilot seats, Nadella said.
Microsoft’s More Personal Computing revenue was $15.58 billion. Revenue for the segment, which incorporates the Windows operating system, Surface PCs, video games and search, rose about 18%, above the StreetAccount consensus of $15.08 billion. Xbox content and services revenue rose 62%, boosted by the $75 billion acquisition of games maker Activision Blizzard, including its popular Call of Duty titles, in October.
Sales of Windows licenses to device manufacturers rose 11%. Technology industry researcher Gartner estimated that PC shipments rose 0.9% within the quarter. Demand for PCs was “a little better than expected,” Hood said.
During the quarter, Microsoft introduced Surface PCs with a key for quick access to the Copilot chatbot. The company began selling access to Copilot for small businesses with Microsoft 365 productivity software subscriptions and tapped Mustafa Suleyman, co-founder of artificial intelligence lab DeepMind, to guide a brand new Microsoft AI group. Suleyman was co-founder and CEO of the startup Inflection, and plenty of of his employees also moved to Microsoft.
“We have been working with speed and intensity, and this influx of new talent will allow us to accelerate our pace once again,” Nadella wrote in a memo in regards to the Inflection deal allegedly value $650 million.
Excluding after-hours movement, Microsoft shares are up 6% this yr, in step with the S&P 500 index.
